Calculate the compound interest on N7400 in 4 years at 6% p.a. If interest is calculated every three months.?
To calculate the compound interest on an amount, we can use the formula:
A = P(1 + r/n)^(nt)
Where:
A = the future value (including the principal and interest)
P = the principal amount (N7400)
r = the annual interest rate (6% or 0.06)
n = the number of times that interest is compounded per year (4 times)
t = the number of years (4 years)
Let's plug in the values into the formula and calculate the compound interest:
A = N7400(1 + 0.06/4)^(4*4)
A = N7400(1 + 0.015)^16
A = N7400(1.015)^16
A = N7400 * 1.26824
By calculating this, we find that the future value (including the principal and interest) is N9379.65. To find the compound interest, subtract the principal amount from the future value:
Compound interest = N9379.65 - N7400
Compound interest = N1979.65
Therefore, the compound interest on N7400 over 4 years at 6% per annum with interest calculated every three months is N1979.65.